UC audit blasts administrators, president's office

Tanya Schevitz and Todd Wallack, Chronicle Staff Writers

Published 4:00 am, Tuesday, May 2, 2006

(05-02) 11:47 PDT OAKLAND - The Bureau of State Audits reported this morning that the University of California's compensation practices are rife with problems, including such mistakes as overpaying one employee by $130,000 and "improperly" boosting retirement benefits for others.

The 137-page audit found that administrators at some UC campuses sometimes circumvented or violated university compensation policies, resulting in questionable forms of compensation and improper payments. At the same time, the auditors found, the UC president's office granted so many exceptions to policies that it may "create a culture of noncompliance."

In addition, the audit confirmed that the university has failed to consistently disclose executives' full compensation to UC's governing Board of Regents as required by university policy.

Much of the pay for UC executives came from student fees and state appropriations, the audit said.

The audit, which covers the 2004-05 fiscal year, confirmed many of the previous findings of an independent audit commissioned by UC that was released last week as well as reports in The Chronicle and other news outlets over the past few months. But the state audit offers more examples of the problems.

"We question whether the regents' and the university's policies provide the transparency necessary to ensure effective oversight of compensation by the regents," the audit said.

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It also revealed new examples of pay granted to top employees in violation of policy or as exceptions to policies. For instance, the UC President's Office gave a dean at UC Riverside a housing allowance of $87,500, far above the policy limit of $53,000. And UCLA advanced a law professor $75,000 in future summer compensation but classified it as a housing allowance in the payroll system.

Auditors recommended UC create a new system to classify compensation into standard categories, limit on the number of exceptions to policy allowed by the UC President's Office, identify inappropriate compensation included in employees' retirement earnings, increase transparency by reporting all forms of compensation to the regents, and track unauthorized exceptions to policies, such as housing and relocation allowances above limits The audit also recommends that the president's office consider requiring employees to repay fund that were paid to them in violation of university policy.

In a university response released along with the audit, UC President Robert Dynes does not dispute the findings and promises to reform the pay system.

"We accept the findings in your report. They are consistent with many of the observations recently reported by the Task Force and our own assessment," Dynes said. "We agree with the Bureau on the need for and importance of stricter oversight and greater transparency, and we have already launched a number of efforts toward those ends."

The audit was requested by state Assembly Speaker Fabian Núñez of Los Angeles after the Chronicle reported that UC paid employees millions of dollars in extra and undisclosed compensation.

"This audit should be the final nail in the coffin of the University of California's outrageous compensation practices,"Núñez said in a statement released today. "Over $300 million in compensation flows unchecked through their system....We must see immediate and marked improvement in their failed system."

The document said UC employees, including many of its highest paid administrators, received $334 million in additional compensation on top of their regular pay for the last fiscal year.

In November, the Chronicle first reported that more than 105,000 UC employees shared $871 million in extra pay on top of their salaries and overtime last fiscal year. But the auditor said its figure differed from The Chronicle's because it decided to classify some of the additional money, including $443 million earmarked for medical school faculty from clinical revenues, as regular pay, while counting a portion of base salaries (including $44 million that faculty received while on sabbatical leave) as additional pay. At the time The Chronicle reported the $871 million figure, UC said it did not have a specific breakdown of the money available, though it has since posted one on its Web site.

The state audit is titled "University of California: Stricter Oversight and Greater Transparency Are Needed to Improve Its Compensation Practices."

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